Luxury Property & LifeStyle

Off Shore Companies

Off Shore Companies
  1. What is an offshore company

Offshore companies are companies based in tax havens, i.e., Countries that have decided to attract investment by granting tax benefits to companies that wish to have their headquarters in these territories.

A legitimate technique to attract investment and capital, since each sovereign territory can establish its taxes, which Portugal also recognizes as practical (offshore of Madeira).

It is important to note that creating or acquiring an offshore company it is not illegal.

2. What are offshore companies for?

The interest of the entrepreneur or individual by an offshore company is mostly about aspects related to the tax burden of his country, as well as to the relative problems raised by the succession civil law.

Offshore companies are entities with legal personality that are not confused with the personality of their partners (or only one person), and their economic activities are aimed at the production or circulation of goods and services.

Offshore companies do not necessarily have a certain legal form, so they shape the needs of each specific case, thus achieving its main purpose, which is to serve the interests of its partners, its other companies and the control of these. Offshore companies, when located in tax havens, may not develop their activities in those countries, and must operate only outside the territory where they are located.

3. Advantages of buying an offshore company at the expense of buying a property in Portugal.

The advantages of purchase of an offshore company that owns a property in Portugal - at the expense of the purchase of the property - are several, namely:

  1. Once the business covers the transmission of the shares of the company based in a foreign country, there is no obligation to pay the Municipal Tax on Real Estate Transfer (IMT);
  2. Non-payment of stamp duty (IS).
  3. The contracts related to the transmission of the offshore company are subject to the legal form required in the Country of the headquarters and are of a private nature, not being required, therefore, a notarial deed, which makes the process less onerous to whom which to acquire a property.
  4. Confidentiality ensured for those who acquires the social participation.
  5. A limited liability to the offshore company.
  6. Through the purchase of an offshore company that owns a property, it is possible to avoid the problems related to the civil inheritance law.
  7. Purchase of an offshore company is completely safe and follows all the requirements and legal ones of the headquarters country

    4. Are there any disadvantages when acquiring an offshore Company?

There are few disadvantages in creating or acquiring an offshore company:

  1. Payment fees requirement of “Management Company” – which has as role the management of the company, as well as, in dealing with legal matters in the Country of the headquarters – taxes and administrative costs. The annual amount can go from € 2.000 to € 3.500.
  2. Obligation to appoint a tax representative to the company.
  3. If in the future the buyer decides to sell the property without the offshore he may be called to pay capital gains. 

    5. Can the buyer of an offshore company apply for the Non-Resident Status (NHR)?

If the buyer chooses to buy an offshore company, it is possible to request the NHR through the conclusion of a lease or lending agreement between the Offshore Company and the buyer.

If, on the other hand, the buyer decides to buy the property to the detriment of the Offshore company, it will have to bear the taxes inherent to the transmission of real estate (IMT and IS), which normally is an amount of 7.5% of the value of the transaction.

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